Presumably any iPhone owner who's tech-savvy enough to hack it is well aware of the consequences of installing Apple's 1.1.1 update. Anyone who misses, misunderstands or disbelieves the company's widespread warnings and loads the software onto the device anyway will seal its doom. The once fabulous smartphone will be neither smart, nor a phone -- but it might make a nice paperweight.

For the adventurous few who have unlocked and otherwise hacked their iPhones to let them use T-Mobile's service -- or to let them install their own applications -- the grim realities of Apple's warnings are hitting home. Its 1.1.1 update effectively renders unlocked iPhones useless -- even when the user replaces the T-Mobile SIM (subscriber identity module) card with a valid AT&T card.

AT&T is the exclusive carrier of the iPhone in the United States, but T-Mobile's network is technically compatible with the iPhone, making the sexy device irresistible to some intrepid T-Mobile customers. Overseas, there are a handful of customers using unlocked iPhones in areas without official iPhone service, too. Some unlocked iPhones have little to do with customers trying to skate by AT&T -- they just have owners who want to use the iPhone.

Either way, the iPhones will continue working as long as the users don't install the 1.1.1 update.

The Warning Signs

While Apple is typically closed-mouthed about anything it doesn't want to talk about, the risks of hacking and unlocking an iPhone have been well known since day one of the product's launch. Most hacker blog posts and online iPhone-hacking tutorials -- and even the loosely organized iPhone Dev Wiki team that's been working together on various iPhone hacks -- have noted that hacking and unlocking iPhones may not only void the Apple warranty and violate terms of use agreements, but also might lead them to catch fire and burn in a black smoking mass of despair. So the risks aren't exactly unknown.

Apple, for its part, placed a big new warning -- capitalized and in bold -- for iPhone users to see as they started the download process to update their iPhones to 1.1.1:

"WARNING: Apple has discovered that some of the unauthorized unlocking programs available on the Internet may cause irreparable damage to the iPhone's software. IF YOU HAVE MODIFIED YOUR iPHONE'S SOFTWARE, APPLYING THIS SOFTWARE UPDATE MAY RESULT IN YOUR iPHONE BECOMING PERMANENTLY INOPERABLE."

As if that weren't bad enough, Apple reiterated the warranty issues:

"Making unauthorized modifications to the software on your iPhone violates the iPhone software license agreement, and the inability to use your iPhone due to unauthorized software modifications is not covered under your iPhone's warranty."

Was It Intentional?

Did Apple set out to create an update that would punish customers for modifying their iPhones?

"Truth be told, there is no way to really know whether Apple breaks hacks on purpose or not, although anyone who would buy an iPhone based on those hacks -- some of them require hardware manipulation and a soldering gun -- is insane, aside from the geeks who just want to be able to say they have a hacked phone," Tony Rizzo, a mobile phone analyst for the 451 Group, told MacNewsWorld.

Of course, Apple isn't likely to spend time trying to create updates that would actually work with hacked iPhones, he noted. The company has more important work to do.

The Money Trail

"I think Apple is fundamentally motivated by revenue opportunities, and those are tied to their management of the iPhone platform," Charles Golvin, an analyst for Forrester, told MacNewsWorld.

"For example, breaking [unauthorized] third-party apps means that you have to buy ringtones from the iTunes store rather than using a third-party app. Further, if -- as many speculate -- Apple is sharing revenue with AT&T, then it is in their financial interest to maintain the device locks," he explained, adding that his comments were speculation and that Apple hadn't shared the company's motivation on the matter.

What's Next

CrunchGear blogger John Biggs owns an unlocked iPhone, but he hasn't upgraded to 1.1.1. He speculates that the people behind the iPhone Dev Wiki team will find a solution, and that the iPhone hackers and unlockers will end up in a game of cat and mouse.

"In the end, this game will become tiring, and the next new thing will come along. Is this good or bad for Apple or us? It will make us wary of locking into a carrier and will give folks like Nokia the early adopter edge after thousands of users are soured by this experience," Biggs notes on his blog. "We don't condone hackery or piracy or jerkery, but watching and participating in what a wide community of very smart people do with hardware, software and a little ingenuity makes us very happy."